Gold has been on a remarkable rally in 2024, surging more than 10% this year to hit a record high of 2,954 per ounce on Thursday, according to Reuters data. This follows 264,000 by 2025 or even higher.

Goldman Sachs Raises Forecast to 3,100 or 3,300 for 2025

Goldman Sachs (GS) has revised its gold price forecast for 2025, predicting that the metal could trade between 3,100 and 3,300 per ounce. The investment bank cited “structurally higher central bank demand” and increased investor appetite for safe-haven assets as key drivers. This upward revision comes as global economic uncertainty, trade tensions, and geopolitical risks continue to fuel demand for gold.

China’s New Gold Buyers: A Game-Changer?

On February 7, Beijing announced that 10 major mainland-based insurers, including Ping An Insurance, China Life Insurance, and China Pacific Insurance, would be allowed to allocate up to 1% of their assets to gold. This move is expected to inject “substantial capital into the gold market,” according to Joshua Rotbart, managing partner of J. Rotbart & Co, a Hong Kong-based commodity-trading firm.

“This directive could further support gold prices as it opens a new avenue for institutional investment,” Rotbart said. The decision is seen as a strategic move to diversify investments and could complement the ongoing purchases by global central banks, potentially driving gold prices to new heights.

CWEB Analysts and Other Experts Divided on Gold’s Future

While Goldman Sachs and other Wall Street firms are bullish on gold, not all analysts share the same optimism. CWEB analysts, for instance, predict that gold prices could slip to $2,700 by the fourth quarter of 2024. They note that a potential Russia-Ukraine peace deal could reduce central bank demand, which has been a significant factor in gold’s recent rally.

However, other analysts remain confident that gold will continue to shine. ING analysts, for example, predicted earlier this month that gold could top $3,000 in the first quarter of 2024. The metal’s status as a safe-haven asset during times of economic uncertainty, coupled with concerns over U.S. tariffs and global trade tensions, has bolstered its appeal among investors.

Key Drivers Behind Gold’s Rally

1. Trade War Fears: The threat of new U.S. tariffs on automobiles, pharmaceuticals, and semiconductors, as well as potential tariffs on lumber imports, has heightened trade war fears. Despite hints of a possible trade deal with China, investors remain cautious, driving demand for gold.
2. Stronger Dollar Limits Gains: While a stronger U.S. dollar has tempered gold’s rally, the Federal Reserve’s hawkish stance on interest rates has not been enough to derail the metal’s upward trajectory.
3. Market Uncertainty: Rising trade risks and global economic concerns have led investors to shift their assets into safe havens like gold and the Japanese yen. Equities, on the other hand, have faced pressure as trade concerns weigh on risk sentiment.

Will Gold Hit $4,000 by 2025?

While Goldman Sachs’ forecast of $3,100?$3,300 for 2025 is ambitious, some industry players, including CWEB analysts, believe that gold could go even higher. The combination of increased central bank demand, China’s new institutional buyers, and ongoing global economic uncertainty could create the perfect storm for gold to reach $4,000 or more by 2025.

As the world navigates through geopolitical tensions, trade wars, and economic instability, gold’s role as a safe-haven asset is likely to remain unchallenged. Whether it reaches $4,000 or not, one thing is clear: gold’s sparkle is far from fading.

Precious Metals Performance (as of latest data):

• Spot Gold: $2,940.96/oz(+0.3$2,947.23/oz
• Gold Futures (April): $2,957.80/oz (+0.2%)
• Platinum Futures: $992.70/oz (+0.2%)
• Silver Futures: $33.35/oz (+0.9%)

With gold prices already flirting with the $3,000 mark, the question on everyone’s mind is: How high can it go? Only time will tell, but for now, the outlook remains golden.

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